Akshat Jain, a marketing professional, recently closed a deal on his first home – a one-bedroom apartment located near Mumbai.
“I decided to buy right now because I think the market is down and this is the right time to invest,” he says. “Plus the offers are good.”
Prices in the sprawling new development in the city of Thane that Mr Jain has bought into start at about 7 million rupees (Dh388,054), with facilities in the project including a sports arena, walking trails, clubhouses and temples.
Developers in India say they are starting to see signs of more such buyers returning to the residential property market, following what has proved to to be a tumultuous period for the industry.
“The real estate sector has experienced challenging times,” says Rohit Poddar, the managing director of Poddar Housing and Development, a builder based in Mumbai. “Developers are hopeful that the sales will pick up from this quarter of the new financial year. This year, the real estate industry expects an increase in homebuyers because of the attractive prices and regulations that have provided transparency to the customer.”
Sales volumes in major cities in India including Mumbai, Chennai and Bangalore fell sharply in recent years, dropping by 62 per cent across eight of the country's biggest cities last year from the highs of 2011, according to property consultancy Knight Frank. Sales in those cities in 2017 were down 7 per cent over the previous year. This subdued demand from buyers meant that Mumbai experienced its first fall in prices this decade in 2017, down 5 per cent on the previous year, the consultancy's data shows.
The real estate sector is hugely important to the the country's economy, accounting for between 5 to 6 per cent of GDP, according to a report by JLL and CREDAI, which forecasts the industry will make up 11 per cent of GDP by 2020. Real estate is the second-largest employer in India after agriculture.
"The last two years, there has really been a slowdown because of demonetisation," says Surabhi Arora, the senior associate director for research at Colliers International in India.
“A lot of unsold inventory is there and because of that the residential sector has been unable to pick up.”
Demonetisation refers to when the Indian government suddenly banned the two highest value banknotes in November 2016 in an effort to reduce the country’s heavy dependence on cash and consequently black money flows. India’s property market had been a major beneficiary of both legal and illegal cash transactions.
Indians also held back from buying homes as they waited to see how new regulatory reforms in the real estate sector, under the Real Estate Regulation and Development Act, as well as a nationwide goods and services tax, or GST, launched last year, panned out. But the dust seems to have settled now, Ms Arora says.
"The bottom has already passed and now is the time when the market will start picking up," she says. "This is the very, very initial phase where we are seeing a little improvement in the market. People have been waiting to see if the prices will fall further, but now the prices are almost stagnant, so people have started perceiving that the price will not move further down."
She says that according to her financial calculations, "developers don't have scope to reduce prices further".
India's new real estate laws came into full effect last year in May, aimed at protecting homebuyers, with measures including making it mandatory for projects and agents to be registered under a regulator. Before this, the property market had been largely unregulated and rife with fly-by-night players. Tighter regulations mean that buyers have more confidence to make purchases, reputable companies in the industry say.
"The ecosystem of the property market in Indian real estate is much better now as the economy is showing signs of improvement with the stringent [property] act leading to better buyer sentiments," says Manju Yagnik, the vice chairperson of Nahar Group, an Indian property developer.
“The positive and brighter outlook comes from the innovative reforms that took place in the real estate sector in 2017. Buyer confidence is at its peak right now.”
Developers can face punishment of imprisonment of up to three years and brokers can be jailed for up to one year for violation of the new rules.
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Among the provisions of the real estate act, developers are now responsible for paying the interest on bank loans in the instance of construction delays, whereas earlier home buyers were impacted by this. Rules also state that 70 per cent of the money collected from customers has to be deposited in a separate bank account. Homebuyers can also face penalties for delays in payments.
Developers say a sign that things are ticking up is that they saw promising demand for property during the Akshaya Tritya festival last Wednesday, a Hindu celebration which in India is considered an auspicious time to buy a home. Developers launched deals including freebies such as free parking, flexible payment options, and cash discounts to entice buyers during the festival.
Ms Yagnik says she is optimistic that India will “see some positive movement in the sector during all upcoming festivities like Diwali”.
But not everyone is finding an attractive deal. Madhur Kalra, a public relations executive, says he has been searching for a home in areas outside New Delhi for the past year, but has not had any luck finding anything within his budget of 10m rupees that would be suitable to accommodate his family. He is currently renting an apartment, but is eager to buy a three to four-bedroom flat.
“Most of the good projects have premium pricing,” he says. “And the ones within my budget are from unreliable developers.” But he remains determined to make a purchase when he can find the right home.
Niranjan Hiranandani, the managing director of Hiranandani Group, a major Indian developer best know for developing vast townships, says there are many reasons to be optimistic about the market in the mid to long term, as economic growth picks up.
“You do see a vibrant middle class, you see a vibrant economy, a lot of people in the town centres are having increased income levels, which were not there or not perceived to be there before, so I think there’s really a positive effect,” says Mr Hiranandani.
But the sector is certainly not out of the woods yet.
“Most of the demand is only from end users,” says Ms Arora. “Investors have totally disappeared from the market right now.”
The cities of Mumbai and New Delhi have been the most heavily impacted by this trend because they were “investor driven” markets, she says, while Bangalore and Pune were less affected because Indians largely buy properties there for their own use.
But this has all been to the benefit of buyers such as Mr Jain, who is excited about moving into the first property to his name.